GLWBs: Retiree Protection or Money Illusion?
One of the most popular variable annuity riders is the guaranteed lifetime withdrawal benefit (GLWB), which offers downside protection through lifetime income, upside potential with step-ups based on market performance, and minimal surrender penalties. But, examining historical data, I have found that those riders carry a cost that will not be readily apparent to retirees: their cash flows rapidly decrease on an inflation-adjusted basis.
Pfau, Wade, "GLWBs: Retiree Protection or Money Illusion?" (2011). Faculty Publications. 167.